Buying discounted company shares - Good idea?

Gotfoodforphil

Hi,

My company is currently offering a scheme where you can purchase shares at 20 % below market price (as of the start of June). In addition, you will receive one extra share for every 5 shares purchased (up to a max of 5 extra). The share price has decreased to approx. 60 % of its peak value a few years ago, but I feel like the company has a solid plan for the future. Finally, the shares must be held until mid - 2023.

What do you think? Does it seem like a good deal? I'm aware of that the taxes would be levied on the potential future profits will cut into them (if they profit at all!)

Thanks for the help!

Bob Harris

Gotfoodforphil wrote: »

Hi,

My company is currently offering a scheme where you can purchase shares at 20 % below market price (as of the start of June). In addition, you will receive one extra share for every 5 shares purchased (up to a max of 5 extra). The share price has decreased to approx. 60 % of its peak value a few years ago, but I feel like the company has a solid plan for the future. Finally, the shares must be held until mid - 2023.

What do you think? Does it seem like a good deal? I'm aware of that the taxes would be levied on the potential future profits will cut into them (if they profit at all!)

Thanks for the help!

Without knowing the company it's hard to say but if they are 60% off peak and you get a further discount of 20% plus a few free ones it would seem decent value. More important than that is what you know of the company and where you see it going in the next 5 years.

shakedown

Is it the option to buy the shares in 2023? ie. You could choose not to buy them (if the 2023 vesting price falls below the 2018 option price) and get your money back.

If so, then it’s essentially no risk.

Skelet0n

shakedown wrote: »

Is it the option to buy the shares in 2023? ie. You could choose not to buy them (if the 2023 vesting price falls below the 2018 option price) and get your money back.

If so, then it’s essentially no risk.

Fairly sure he means you buy them now and can't sell until 2023, to stop you getting your discounted shares today, selling them at market price tomorrow and pocketing the 20+%.

keane2097

This doesn't seem great tbh. Important to remember that if you are incorrect about the company's solid plan for the future then you could easily end up ****ed twice - i.e. they do badly and you get downsized as well as your 10k or however much bleeding away to nothing.

Gotfoodforphil

Thanks for the responses. Decided not to buy the shares in the end. Will find out in the next 5 years how it works out either way.

sexmag

Gotfoodforphil wrote: »

Thanks for the responses. Decided not to buy the shares in the end. Will find out in the next 5 years how it works out either way.

At such discounted rate it seems like a going out of business sale.

You probably made the right choice

db

If you had bought them now you would have been liable for tax immediately on the discount.